The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Robert Cyran

NEW YORK, June 2 (Reuters Breakingviews) - Google's owner plans to raise the huge equity sum, including from Berkshire Hathaway. With the tech giant's capex octupling since 2021, its free cash flow yield has dropped to 1%. As SpaceX, Anthropic and OpenAI tee up IPOs, it's wise to move now before investors get jittery.

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CONTEXT NEWS

Alphabet said on June 1 it plans to raise as much as $80 billion in what would be a record U.S. secondary offering of equity.

The owner of Google and YouTube will issue $10 billion in stock to Berkshire Hathaway in a private placement. Those shares, equally divided between Class A and Class C, are priced at about a 6% discount to the closing stock price on June 1.

Another $15 billion of mandatory convertible preferred stock, and $15 billion of Class A and C shares are being sold in an underwritten offering. Starting in the third quarter, Alphabet intends to issue up to $40 billion more of Class A and C shares at the money, or ATM.

Approximately $30 billion of the ATM offering will be used to cover tax obligations associated with the vesting of employee equity awards. Remaining proceeds will be used for corporate purposes, including capital expenditure for AI infrastructure.

Goldman Sachs, JPMorgan and Morgan Stanley are the underwriters.